Amazon e-Book Settlement: How Much Will We Get?

Like me, you probably got the email this weekend from Amazon with the subject “Kindle Book Credit.” I opened it hoping Jeff Bezos was going to give me money. After all, pigs fly.

Here’s exactly what the email stated. I read it three times to decipher the meaning. See the email for yourself and then read my take below.

To figure out what was really going on–web articles were equally confusing–I asked my studious lawyer friend to break it down. Apparently, the five major publishing houses and Apple were upset when Amazon started selling e-books much cheaper than they sold the hardback counterparts. Read: Amazon grabbed the lion’s share of buyers and, therefore, profit. Here’s an example: The list price for the hardback version of Gone Girl is $25 while the Kindle version is only $12.99. (Meanwhile, Amazon sells the hardback at $13.94 which crushes local bookstore prices–this is a separate but related issue.) In an effort to combat Amazon’s dominance and to stay afloat, the publishing houses and Apple “colluded” to raise the price of e-books. They created ‘agency model’ pricing, meaning that the publishers set the price of e-books, not Amazon, and gave Amazon a percentage of each sale (30 in this case). In a traditional wholesale market, the supplier (book publishers) sells the product to the retailer (Amazon), and the retailer can name whatever price it sees fit.

The Department of Justice said, “Hold up,”* to the agency model and sued the publishers and Apple. The DoJ’s legal stance was this: “Price fixing is illegal, yo.” Long story short, three publishers don’t want to fight this battle anymore. Hachette Book Group, Simon & Schuster and HarperCollins said, “We’re out. Take our money and leave us alone.” They put $69 million into a fund to pay back buyers for their fixed prices. This is the money that Amazon (and Barnes and Noble) will supposedly give back to us after a hearing in February. This is obviously a blow to the agency model’s cause. But Apple and the two other publishers aren’t giving up. They’re headed to court in coming months.

So, if you bought an e-book published by Hachette, Simon & Schuster and HarperCollins on the internet between April 1, 2010 and May 21, 2012, you are entitled to a refund. Amazon stated in its email that the credits will arrive automatically, and consumers don’t need to do anything. (Pigs may grow wings.)

I’m so psyched! I’m going to receive anywhere from 30 cents to $1.32 for every book I bought that falls under the terms of the settlement. I purchased 43 books on Kindle in that time frame. I have no idea how many were published by Hachette, Simon & Schuster and HarperCollins, but best case scenario, I’ll get 43 x $1.32 = $56.76. Worst case, I’ll get nothing. I have no idea how or who is determining the refund policies.

So, yes, Amazon meant it when they wrote, “We have good news.” They are on their way setting whatever prices they want. This means e-books will probably become cheaper for consumers. Meanwhile, the American Booksellers Association–i.e. the local bookstores–are not happy. As e-book sales grow, their bound books will be more difficult to sell.

Did I make this clearer, or did I just confuse you more? I tried. It’s a hot-button topic for bookish people, and far saucier than 50 Shades of Grey.

I’m on the fence and see valid points on both sides of the issue. But no matter how we feel about it, we need to do one thing. If we like our local bookstores, we have to show them some love. And we must do it often, or they might be empty this time next year.

*quotes may not be exact

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  1. by Carrie

    On October 17, 2012 at 12:21 pm

    Thanks so much, you actually made it all clearer for me. My husband and I have purchased over 150 books during that time frame, many from those publishers, soif we do get anything back…..WOOHOO!! Lol